DUBLIN, OH--(Marketwired - Mar 31, 2014) - Cardinal Energy Group, Inc. ("Cardinal Energy" or "the Company") (OTCQB: CEGX) announced financial results for the twelve months ended December 31, 2013. The Company also provided current production data and guidance along with an update on its existing business strategy.
The Company is focused on growth via the reworking of marginal oil and gas wells, exploiting untapped "behind the pipe" reserves by recompleting current well bores in zones overlying currently producing formations and by selected development drilling in mature but marginally producing fields throughout Texas. Many of these wells were drilled during the boom time of the early 1980's. Newer production theories and technology make it possible to re-enter these older wells that have been "walked away from" by their original operators.
FY 2013 Financial Results
Revenues from oil and gas decreased to $16,657 for the year ending December 31, 2013 from $21,162 for the prior year as a result of lower production.
General and administrative expenses increased to $1,546,956 for the year ending December 31, 2013 compared to $206,585 for the year ending December 31, 2012. The primary reason for the increase was higher consulting and professional fees incurred in connection with oil and gas property acquisitions. Non-cash stock-based compensation expense for third party consultants was $578,375 in 2013 compared to $15,150 in 2012. Additionally, 2013 earnings were negatively impacted by higher interest expense related to the Company's higher level of debt outstanding during the year.
Net loss for the year ending December 31, 2013 was $1,990,212 compared to a net loss of $819,255 for 2012. Net loss per share was $0.06 for 2013 compared to $0.03 in 2012. The weighted average shares outstanding increased to 35.1 million shares in 2013 from 32.0 million shares in 2012.
Cash and cash equivalents were $18,694 at December 31, 2013, up from $3,460 at December 31, 2012. The Company used $428,733 of cash in operations during the year ended December 31, 2013 primarily for costs related to identifying and acquiring additional oil and gas properties and reworking existing wells. Management anticipates incurring additional costs to identify and acquire additional oil and gas properties, to rework and re-complete existing wells and to drill new wells in 2014.
Through March 28, 2014 Cardinal Energy has raised $3.5 million through the sale of 12% senior secured convertible notes. The notes mature on December 31, 2015, are callable by the Company and have a conversion exercise price of $1.00 per share of common stock. Proceeds will be used to re-work and recomplete its 78 wells located in Texas, fund strategic acquisitions, and for working capital.
On March 5, 2014, Cardinal Energy acquired a 100% working interest in the Powers-Sanders lease located in Shackleford County, Texas from Sabor X Energy Services, Inc. for $600,000. The prospect consists of 385 acres and three producing oil wells with current production of 20 BOPD. The Company plans to rework and recomplete additional pay zones on these wells to increase their production rates.
The Company acquired a 100% working interest in the Stroebel-Broyles leases located in Eastland County, Texas, from Hunting Dog Capital, LLC for $75,000 in March 2014. The property consists of 235 acres and 32 wells with production of 3 BOPD. This acquisition, along with the Powers-Sanders acquisition, increases the Company's aggregate acreage in Texas to 1,238 acres and aggregate oil production to 44 BOPD.
Cardinal Energy anticipates increasing output from these fields as it conducts additional reworks and recompletions on previously-producing wells, perforates other zones currently "behind pipe" overlying the producing formations and by drilling selective additional development wells in 2014 and 2015.
Current Production and Guidance
Company is currently producing 44 BOPD in South Central Texas on 1,238 acres in Shakelford and Eastland Counties. As of March 28, 2014 the Company has available for sale 820 barrels of oil from its ten operating wells in Texas. Management expects the Company to achieve a production rate of 400 BOPD by Q3 2014.
Texas Expansion Strategy
The Company will continue to deploy the following growth initiatives:
- Re-work and recomplete its 78 wells located on 1,238 acres in Shackelford and Eastland Counties.
- Cardinal will invest approximately $3.5 million over the next several months and anticipates obtaining an estimated 400 BOPD from these existing wells
- Cardinal will continue production expansion by:
- Recomplete multiple formations which are behind-pipe in Shackelford and Eastland Counties to increase oil production substantially.
- Drilling and completed multiple development wells in already proven formations
- Acquiring geological and reserve qualified inactive and orphaned wells for "cents-on-the-dollar"
- Currently 900+ inactive and/or orphaned wells are available to claim and purchase in these counties
As previously announced, Cardinal anticipates acquiring the Mohican Operating, Inc. assets for $20 Million. Management believes this is an attractive prospect which encompasses the following particulars:
- Prospect comprised of a 6,000 (+/-) acre oil & gas field
- 24 producing oil and gas wells
- Producing 30 (+/-) BOPD and 30,000 MCFPD
- $32 million Proven Reserves (PV 10)
- $57 million Proven & Probable Reserves (PV 10)
Cardinal's strategy for Mohican will be to expand production by drilling up to 38 wells in proven developed, proven undeveloped and probable reserve locations; and perforating multiple behind-pipe producing formations.
Timothy Crawford, CEO of Cardinal Energy stated, "We see tremendous opportunities to increase production to existing and acquired wells. Our seasoned team has a solid track record of identifying, remediating and operating oil and gas properties in Ohio and Texas. The capital we recently secured will allow us to rework abandoned wells and drill in-field wells into new formations. This low-risk, capital-light strategy should result in significant increases in production and reserves in 2014 and beyond."
Investor Conference Call
The Company will host a webcast and conference call with investors at 11:00 am ET on Thursday, April 3, 2013. President and CEO Timothy Crawford and CFO John Jordan will discuss the company's assets, growth strategy and financial position.
Date: Thursday, April 3, 2014
Time: 11:00 am ET
Dial-in (US): 877-941-2068
Dial-in (International): 480-629-9712
Conference ID: 4676290
A replay of the call will be available from 2:00 pm ET April 3, 2014 to 11:59 pm ET April 17, 2014. To access the replay, use 877-870-5176 for U.S. callers and 858-384-5517 for international callers. The PIN number is 4676290.
Forward Looking Statements
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Cardinal Energy Group, Inc., is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intends," "plans," "believes" and "projects") may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our expectations concerning our ability to obtain financing and close on the acquisition of the oil and gas leases and property, our beliefs concerning our ability to increase the rate of oil and gas production, and the expected demand, pricing and operating results for our oil and gas operations.
About Cardinal Energy Group, Inc.
Cardinal Energy Group, Inc. is a U.S producer of oil and natural gas within the United States. The Company is based in Dublin, Ohio. Cardinal focuses on known formations that have significant proven reserves remaining that can be produced economically. Cardinal targets fields with wells that may need remediation due to neglect or undercapitalization. We select prospects that offer a strong up-side for production. The upside we seek in a prospect is twofold -- it must have the potential to be restarted or have its current production increased using newer technology and remediation methods and; it must also have additional lease acreage which can be further developed by completing development wells adjacent to existing producing wells. Cardinal exploits these undervalued assets by acquiring a majority working interest in the prospect and then applies the Company's calculated development plan. Cardinal also seeks acquisitions of over-leveraged companies when there is a clear upside from their purchase based on strong commodity prices. The Company operates throughout the Continental United States. More information on Cardinal Energy Group, Inc. is available at www.cegx.us.